CBC knocks ‘critical flaw’ in Cuomo pension proposal

The Citizens Budget Commission, a business-backed fiscal watchdog, he sent a letter to Comptroller Tom DiNapoli outlining concerns with Gov. Andrew Cuomo’s proposal to let municipalities lock-in to a stable pension contribution rate.

Briefly put, the Governor’s proposal endangers the pension funds by promising a stable rate of contributions over a 25-year period, but the State is unlikely to be able to keep that promise. The very nature of a defined benefit pension plan is that its costs vary with changes in investment returns and other factors that impact benefit costs over time. Adjustments to contribution rates are, therefore, inherent to defined benefit plans; pretending otherwise by “fixing” an arbitrary rate that is unlikely to hold five or ten years from now does a disservice to the public by creating the impression of assisting local governments with their fiscal problems. In fact, the plan will merely push a larger problem off to later years.

Organizations like the New York Conference of Mayors have backed Cuomo’s plan as a worthy option — stress option — for localities. Syracuse Mayor Stephanie Miner has been critical of Cuomo’s plan along the same lines as the CBC.